Track Actual vs. Expected Results
Exercise Claims Control
Exercise Expense Control
Exercise Investment Income Control
Exercise Mix of Business Control

Track Actual vs. Expected Results

 new business
 lapses
 reasons for deviations of Actual from Expected
 all of the above statistics should be separated by line of business
 Two sets of books are kept: one statutory, one internal

Exercise Claims Control

 Verify eligibility of claimants
 avoiding paying for unauthorized procedures
 Process claims efficiently
 Promote wellness and early diagnosis
 provide Rehabilitation (for disabled people, to limit future claim costs)
 enforce plan provisions
 make Plan changes (raising deductibles and coinsurance)
 prevent overinsurance (by making use of offsets / coordination with Medicare, etc.)
It's important to prevent overinsurance because if a person has too much insurance, he is more likely to submit a lot of claims.

Exercise Expense Control

 Expenses Include (among others):
 Salaries
 commissions
 overhead
 So, control of expenses is largely a matter of controlling the number of Ins Cpy employees.
Suggestions:
 Relocate to low wage area
 or use Technology to reduce the number of EE’s needed
 Expenses must be allocated to the different business units.

Exercise Investment Income Control

 review the cpy’s investment objectives
 analyze the current market
 more important for LI than HI (which has fewer invested assets)

Exercise Mix of Business Control

 Find a more attractive market, i.e. a population with better:
 risk characteristics
 products they need
 geographic area

To find the best target market:
 assess profit/growth potential in major markets
 notice external factors (economy? competitivity in that area?)
 determine the shifts in business and products the Ins Cpy would need in order to achieve success in those markets
 evaluate Ins Cpy’s strengths/weaknesses in being able to make these changes.